Standing Committee D

[Mr. Bill O'Brien in the Chair]

Water Bill [Lords]

Clause 19 - Protected rights

Amendment proposed [this day]: No. 38, in 
clause 19, page 22, line 32, leave out 'four' and insert 'six'.—[Mr. Wiggin.]
 Question again proposed, That the amendment be made.

Bill O'Brien: I remind hon. Members that with this we are considering the following:
 Amendment No. 119, in 
clause 103, page 128, line 40, leave out 'four' and insert 'six'.
 Amendment No. 120, in 
clause 103, page 128, line 43, leave out 'four' and insert 'six'.

Andrew Lansley: For the benefit of those who read the report of our proceedings, I remind hon. Members that the purpose of my intervention at the end of this morning's sitting was to recall that, at the start of his contribution, the Minister referred to the phrase ''or any other period'', which might be an extension of the period of protected rights. He seemed to be quoting, but I could not see whether he was quoting from the Bill.
 Although the Minister kindly offered to write to me and to other hon. Members about the limitations—as I saw them—on the extension of protected rights, I hope that he does not suppose that he has answered my point, and that we might see his answer in writing later. I am concerned that there might be valid circumstances in which a licence holder has not used the licence for a period of time that might not be encompassed in new subsection (9)(b) in clause 19.

Elliot Morley: First, I shall try to sum up where we are, which might be helpful to the Committee. On the hon. Gentleman's point, I can tell him that in the original Bill, the four-year period was fixed and there was no provision for an extension. During debate in the other place, the Government made a concession to ensure that the Environment Agency could, in certain circumstances, extend that period. Our view is that the Bill's wording is sufficient to give the agency the power to do that. We will re-examine the text to ensure that the concession is being delivered. I will ensure that that is checked, and if there is a problem, we will consider it.
 To return to our discussion on protected rights, we were getting confused about the different issues of protected rights and abstraction rights. We are talking about protected rights, not abstraction rights. We are talking about abstractors who will be exempt under this Bill—those who come below the 20 megalitre 
 limit. They can continue with protected rights so long as they are abstracting. If they stop abstracting, they do not lose the right to abstract, but they will lose protected rights after four years. They can start to abstract again at any time. 
 There was an argument about four years versus seven years versus six years. I reiterate that the Bill is about resource management, and good resource management requires in all cases that exemptions be kept to the minimum that is reasonable. The four-year period is consistent with the proposed four-year time scale, later in the Bill, for removing an abstraction licence that is held and not used, and the period of review of discharge consents. That strikes the right balance between helping the agency to discharge its resource management duties and safeguarding the rights of the abstractor. I invite the Committee to support the measure.

Bill Wiggin: I am disappointed that Labour Members came back from lunch quite so quickly, because there was a moment there where I would not have had to appeal to their better nature. As the Minister says, this is a question of judgment. I think that the provision should be consistent with the catchment abstraction management strategies, but the Minister does not agree, and I should like to press the amendment to a vote.
 Question put, That the amendment be made:—
The Committee divided: Ayes 9, Noes 11.

Question accordingly negatived. 
 Clause 19 ordered to stand part of the Bill.

Clause 20 - Register of certain protected rights

Sue Doughty: I beg to move amendment No. 196, in
clause 20, page 23, line 22, at end insert— 
 '(f) a duty for the Agency to publicise the procedure and expiry date for applying for a protected right to be included in the register.'.
 We are concerned about information being made available to people. We are worried that people could miss the boat by applying too late. They might not realise that they have apply for their protected rights to be on the register. People have a time-limited window, and it is essential that they are informed that they might lose their right if they do apply. There is no problem for people who are actively abstracting and using their right; they will probably be aware of the 
 requirement and will talk to the agency, so information will come through. 
 People who have not used their protected rights for more than two years may be less likely to think about making that application in time. Because of the changes in agriculture and farming practices and the current problems of countryside businesses, people might decide to diversify and develop an area of water as a fishing feature, for example. It seems logical that the two-year period should be changed, in line with the four-year limit for the non-use of the protected rights. We therefore say that the limit should be four years on one side and four on the other, so that people can ensure that they make their application. It is a matter of sweeping in all the people who should be aware of the provision, some of whom, because they are not using their rights at the time, may not have been keeping their eye on the ball.

Elliot Morley: We do not disagree with the principle of what the hon. Lady is saying. We entirely accept that it is important that people are aware of the protected rights register and that it should be brought to the attention of abstractors of small quantities of water. I can assure her that there is no need for the amendment. First, the agency will have a record of the former licence holders whose licences have fallen away by virtue of the change in the thresholds.
 Secondly, the Bill applies the schedule 6 procedure in the Water Resources Act 1991 to the setting up of registers. That procedure requires an order that establishes a register to be advertised in the local press. We will expect the agency, in the normal course of its business, to liaise with stakeholder groups such as the National Farmers Union and to draw their attention to the measure. Together, clause 20 and new schedule 6 provide the right mechanism to bring the protected rights register to the attention of those who will need to register and those who need to know about it. What the hon. Lady wants is provided for in the Bill.

George Osborne: I should declare a sort of interest. The measure might catch me in the sense that at my house, near my constituency, in the Peak District national park I have a bore hole from which I extract water to use in my house, as indeed do most of my neighbours. Currently, we are not required, as far as I am aware, to register the bore hole with anyone except the local council, which checks the water quality periodically. A national park may well be classed as a particularly environmentally sensitive area.
 I should be interested to know whether the Minister envisages a massive compilation on the register of all the people who live in such an area and who have bore holes and so on, because there are no mains water supplies in much of the national park. Is there any prospect of home owners—I am talking not only about farmers and large-scale users of water, but domestic users—having to pay a charge to register their rights?

Elliot Morley: People who are using water for domestic supply or using small quantities to water livestock, for example, will be below the threshold set in the Bill. They do not, therefore, require an abstraction licence, and there will not be a charge in that respect.

Sue Doughty: I accept some of the Minister's points, but I am concerned, on amendment No. 197—

Bill O'Brien: Order. I draw attention to the fact that we are debating amendment No. 196.

Sue Doughty: I apologise, Mr. O'Brien. I will speak to amendment No. 197 later.
 I continue to have concerns about people being made aware of the measure. If people are away the week that the information is in the paper, they may completely miss it. It may not be explicit in the Bill, but I hope that every opportunity will be given, in terms of due diligence, to ensure that those who do not read the interesting adverts in the back of the paper week after week are aware of the change in the arrangements, so that they can organise themselves to deal with it. I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn.

Sue Doughty: I beg to move amendment No. 197, in
clause 20, page 23, line 30, leave out 'two' and insert 'four'.
 I shall be brief. This is a case of natural justice. Given that there is four years to sort out what we are doing about non-protected rights, and that they lapse if an application to register them is not made, it is reasonable that someone should have four years to get the application in. I cannot see why the period has to be only two years; there is no logic to that.

Elliot Morley: The amendment would extend the period from two to four years, as the hon. Lady said. Generally speaking, we need to give people reasonable time to register any interest under measures introduced by the Government or local authorities for householders and businesses. The normal time limit for that is 12 months, but the Bill goes further by providing two years. That is generous, and people who have to register protected rights should have plenty of time to do so. Four years would be a bit excessive, and I hope that the hon. Lady will agree that two years is a fair compromise.

Norman Baker: New subsection (5) provides that the time limit is not simply two years, but that the Government accept that it may be longer, in the phrase,
''or such longer period as may be specified in the order.''
 As that uncertainty is built into the Bill—the Minister may call it flexibility, but I call it uncertainty—will he explain the circumstances in which it would be appropriate to specify a longer period?

Elliot Morley: It is not unusual to include a provision for a longer period. For example, if an error occurred and an advert did not appear in the paper, it might be appropriate to extend the time past two years. The provision will cover only exceptions, and two years will usually be adequate. However, I should say that
 by pointing out that provision, the hon. Gentleman is arguing against the amendment of his hon. Friend the Member for Guildford (Sue Doughty).

Sue Doughty: I am not totally convinced, especially in light of the most recent exchange, but I can see that we will not make further headway on the issue. I do not think that we should press for a Division, so I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 20 ordered to stand part of the Bill.

Clause 21 - Form, contents and effect of licences

Robert Key: I beg to move amendment No. 164, in
clause 21, page 24, line 7, at end insert— 
 '(2A) At the end of subsection (2) there is inserted—
''(c) provision for ensuring public access to information about the quantities of water referred to in paragraphs (a) and (b).''.'.
 The amendment is designed to change section 46 of the Water Resources Act 1991. It would provide that every licence required publication of the quantity of water to be abstracted. 
 I should like to explain why I decided to table the amendment. My admiration for the military runs deep. In my time as the Member of Parliament for Salisbury, I have known about eight or nine Secretaries of State for Defence, four times as many Ministers of State and 10 times as many Under-Secretaries. I have dealt with them all about the estates of Salisbury plain. I must make it clear that I am full of admiration, not only for the MOD's guardianship of its land, but for the progress made on defence estates. Conforming to strict regulations, the MOD has made changes that relate not to military occupation of the land, but to looking after land properly on the community's behalf. 
 The Minister said that he does not want Crown immunity used, but he recognises that on grounds of national security it might be appropriate not to reveal some information. My hon. Friend the Member for East Devon (Mr. Swire) said that the MOD should decide what to disclose, which is fine up to the point at which it has to justify that decision. The MOD's natural stance is not to tell anybody anything if it can avoid it, and I understand that—it is not a bad rule of thumb. However, there are sometimes turf wars among Departments and their interests in the Salisbury Plain—or any other—training area, and among local people, parish, district and county councils, and the military. 
 The situation depends who is the current commandant of the Salisbury Plain training area and on how tough they are about the enforcement of public access to footpaths, bridleways and so on. At the moment, we have a tough regime, but at other times it has been not so tough. The Army always does its best to give maximum access for recreational activity, whether that is for hawking, model aircraft or riding.

Hugo Swire: Hunting?

Robert Key: I am glad to say that hunting continues to be allowed on Salisbury plain at the specific direction of the current Defence Secretary. He may not know it, but he allows hunting.

Bill O'Brien: Order. I did not want to intervene, but as the hon. Gentleman continues to talk about fox hunting, I have to. Will he stick to the amendment?

Robert Key: I apologise, Mr. O'Brien; you are entirely correct.
 The MOD does not have a good record on water and sewage disposal. It realises that its water treatment plants and processes are antiquated and, some might say, legendary. Indeed, a few years ago the Cholderton and District Water Company, a small private undertaking, discovered that there was carbon tetrachloride in the tap water. Some zealous NCOs on Salisbury plain had been cleaning out the tanks for the dry cleaning of military uniforms and the pollutant had gone into the aquifer. However, the military are making huge efforts to put that right with Project Aquatrine, the biggest single PFI project in the MOD, which will contract out all their water and sewerage systems throughout the country. 
 The problem is that there has been massive abstraction in the Salisbury Plain chalklands for many years, with the water being exported from the area to Yeovil, Chippenham and other places. The beneficiaries have not been my constituents, but they have suffered from the low flows that occur because of excessive pumping out in the headwaters of the catchment. I am particularly concerned that legislation will make a nonsense of catchment abstraction management strategies, or CAMS, which I am afraid brings us back to the water framework directive. I suspect that both Crown immunity and the military's failure to tell us how much water they are taking will fall foul of the directive. 
 I asked some parliamentary questions about the problem in February, starting with how many bore holes there were on Salisbury plain. The answer is that there are 24 belonging to the MOD, but I cannot be told where they are for security interests. That is fair enough—I do not mind where they are—but I wanted to know how much water they abstract and what impact they have on the low flows in the streams that share the aquifer. 
 I asked another question about the daily abstraction rate from all 24 bore holes, the emergency bore hole, the largest volume bore hole and the smallest volume bore hole. I received an answer on Tuesday 8 April: 
''The abstraction rate from individual boreholes has security implications and I am therefore withholding it under Exemption 1 of the Code of Practice on Access to Government Information.''—[Official Report, 8 April 2003; Vol. 403, c. 145W.]
 Under the heading 
''Defence, security and international relations'',
 that exemption cites 
''information whose disclosure would harm national security or defence''.
 I know a bit about the problems of water being used by terrorists as a means of distributing pathogens 
 because I also represent Porton Down, which is only a few miles from the area that I am talking about. I specifically did not ask for that information, but the MOD was not prepared to give even the global figures. It will not do for the Minister to reply by saying that the Defence Secretary invokes the code and that is the end of the story, because that is not joined-up government. We need to know why the MOD has done that—it must justify its actions. 
 It is also absurd if large public companies have the information and the Environment Agency does not. I say that because I had a letter from the area manager of the South Wessex division of the agency on 16 April about the important Bourn and Nine Miles rivers project, which involves low flows and abstraction from chalk, telling me about the current position. 
 I wrote back asking the area manager if he would explain how much water was extracted by the MOD because I had not managed to get such information. I asked if all his modelling on the Bourn and Nine Miles rivers project and the River Avon and special area of conservation strategy was taken into account. What particularly struck me is that when I spoke to a representative of Thames Water at the launch of those projects on 4 April, he expressed surprise that the MOD was withholding information. He said that all that information was public knowledge and was available to Thames Water and Wessex Water, without restriction or confidentiality agreements, in connection with project Aquitrine. 
 I wanted to know why, to the MOD, the information was so secret. The area manager wrote back to me on 19 May. He said: 
''I am given to understand that various pieces of information concerning Ministry of Defence sites were made available to bidders under Project Aquitrine, but am unaware of the nature of that information.''
 He was not told. The Environment Agency did not know, although the commercial company knew. The letter continued: 
''No detailed abstraction data was received in this Region under those auspices and so I am unable to make further comment other than to say that any information we have concerning Ministry of Defence abstractions must be treated as confidential.''
 That is why I tabled the amendment. 
 It is extraordinary that the MOD, without justification, can say that it will not tell anyone anything, but it then gives information to the water companies, which are large organisations employing hundreds of people. One can imagine the number of copies of the letters that are circulated to telling everyone, but the agency is not told and neither are Members of Parliament. That is not joined-up government and it will not conform to the water framework directive. It is an abuse of Crown immunity, whether or not it is in the security interests of the MOD to tell us. 
 I hope the Minister will agree that my amendment is sensible. It does not seek to say that the MOD should not have any secrets, which would be ridiculous. Of course it should, but the blanket approach to saying 
 no is not in the spirit of the age in which we live and is certainly not appreciated by my constituents.

Elliot Morley: The hon. Gentleman knows that as a general principle I accept much of what he says in making his reasonable case, but I cannot support his amendment. It may not be what he intended, but its effect would be to put the onus to provide information on the abstractor, not on the agency. I understand that he feels that information should be available, and certainly to the agency because of its responsibilities under the water framework directive.
 As I explained, we want to lift Crown immunity in those circumstances, although we will have to respect issues of national security, as the hon. Gentleman will understand. Information on abstraction flows and rates may be useful to people who have a malicious intent, for example, so there may be good reasons for the MOD withholding that information. 
 Through the Green Ministers Committee, all Departments have been charged with responsibility for sustainable management on Government estates. The MOD has done a lot of good work on biodiversity and resource management, and it deserves credit for that; it has a successful structure to drive it forward. 
 I assure the hon. Gentleman that we are in the process of lifting Crown immunity. We will respect the issue of national security, which will reassure the MOD. The information related to all the points raised by the hon. Gentleman will be made available to the Environment Agency as part of the CAMS process in the water framework directive. 
 The agency will have that information, and I want it to put as much of it as possible in the public domain. However, to address the MOD's concerns and safeguard national security, the agency will release it only after clearance from the MOD. The water companies will also have a responsibility in that regard. They have a good understanding of security as they have their own security issues to address. The information that the water companies receive will be sent in confidence, and there are strict rules governing who in those companies has access to sensitive information. 
 I have outlined the current situation. In future, the agency will have all the information that the hon. Gentleman, quite rightly, would want it to have, and I want to see as much as possible put in the public domain, with the caveat of national security and one or two other legitimate reasons.

Robert Key: I am grateful to the Minister for that commitment. It is an important step forward for the Environment Agency to have that information. It may therefore be unreasonable for me to seek to press the matter to a Division. However, I ask the Minister if he will draw this debate to the attention of Defence Ministers, and stress the importance that we all attach to the MOD being able to justify what it does, rather than just putting down the shutters when information is sought. On that basis, I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Robert Key: I beg to move amendment No. 165, in
clause 21, page 24, line 15, at end insert— 
 '(3A) After subsection (3) there is inserted—
''(3A) Every licence under this Chapter to abstract water shall impose a duty to use the water abstracted in an efficient manner, so as to further water conservation.'.
 One of the first things that we did on Tuesday was to delete clause 1, which had been subject to careful argument in the other place. That clause concerned the duty to conserve water resources, and in that context the Minister said that new clause 16 would impose 
''a duty on the Secretary of State to take steps to encourage water conservation.''—[Official Report, Standing Committee D, 16 September 2003; c. 9.]
 The new clause itself is headed, ''Duty to encourage water conservation.'' However, later in the clause, that is no longer mentioned as a duty, and certainly not as a duty on the Secretary of State. 
 The new clause says: 
''The relevant authority must, where appropriate, take steps to encourage the conservation of water.''
 That seemed odd to me, because I thought a duty was to be imposed. However, no duty is imposed in law, but ''where appropriate'' there is an obligation on the relevant authority to ''take steps''. 
 I was therefore intrigued to see a letter from Lord Whitty to my noble Friend Baroness Byford, dated 12 September, in which he reiterated that a duty would be imposed. He stated: 
''The Government amendment retains the principle of the clause, whilst addressing these concerns. This will place a duty on the Secretary of State to take steps to encourage the conservation of water and report to Parliament every 3 years on the action taken.''
 However, it does nothing of the sort. It does not place a duty on the Secretary of State: it requests the relevant authority to take steps. I contend that that is completely different, and I do not like it. 
 I do not suppose that Ministers were seeking to mislead anyone, but the situation could be read differently. In paragraph 9.27 of the Government's discussion paper, ''Taking Water Responsibly'', they said that they would 
''bring forward legislation, when Parliamentary time allows . . . to place all other abstractors under an enforceable duty to use water abstracted under authorisations in an efficient and effective manner.''
 That led to the drafting of clause 1 of the Water Bill, which was introduced in the other place. 
 The Bill will give the Environment Agency no control over the efficiency of water abstracted under licences granted in perpetuity, which account for 90 per cent. of the licences in force. The majority of abstractors will remain able to use water as they see fit, however profligately, provided that they do not exceed the licence conditions, such as those on use, volume and timing. The Government should honour their original commitment to place all abstractors under a clear duty to use water efficiently. After all, they claim that they have put a duty on the Secretary of State—but they have not. 
 All abstractors should be on a level playing field, and provide the Environment Agency with a new tool 
 for seeking efficiency gains without having to resort to the cost and complexity of revoking or varying a licence against a holder's consent. I make no apology for returning to this issue, which we dealt with on the first day of our proceedings, because I would like the Minister to explain why we have been told that there is a duty on the Secretary of State when there is not—there is no duty at all. I hope that that gives the Minister an opportunity to toughen up that aspect of the Bill.

Elliot Morley: Again, we have no problem with the perfectly reasonable principle of requiring efficient use of water by all holders of abstraction licences. We deleted clause 1 to insert a new clause, which—as the hon. Gentleman makes clear—recognises the need to ensure efficient use. We wanted to word it so that it was consistent with the Bill and with current needs. I assure him that, although he may have read it differently, new clause 16, which replaced clause 1, does indeed put a duty on the Secretary of State in relation to the efficient use of water. I put that on the record now.
 On amendment No. 165, the Environment Agency already has the power to impose on any abstraction licence conditions relating to the efficient use of water. It also assesses water efficiency in the grant of every new licence as part of the test of ''reasonable requirement''. There must be a proof of ''reasonable requirement'', and it can take action to prevent prolific use of water where it occurs or where action is needed. All those requirements are tailored to specific cases and are clearly enforceable, whereas the changes proposed in the amendment may not be, as it is broad. We have addressed this point following debate in another place by adding clause 75, which makes it explicit that the Environment Agency's general water resources duties include a duty to ensure that those resources are used efficiently. There is a duty on the Environment Agency and one on the Secretary of State. I hope that the hon. Gentleman is satisfied with those assurances.

Robert Key: Where is the phrase ''duty on the Secretary of State''? Can the Minister tell me please? [Interruption.] I think perhaps he cannot.

Elliot Morley: I can. It comes from the word ''must'', which implies a duty. New clause 16 states:
''The relevant authority''—
 which is the Secretary of State— 
''must, where appropriate, take steps to encourage the conservation of water.''
 When the word ''must'' is used in legislation, it implies an obligation or a duty.

Robert Key: I am surprised that this has come to me so late. I do not know whether everyone else is satisfied with that explanation. I will take the Minister's word, but I imagine that many other people reading the debate will want to pursue it. In view of what he has said—

Hugo Swire: My hon. Friend has touched on an important point. New clause 16 states:
''The relevant authority must, where appropriate, take steps to encourage the conservation of water.''
 Can he think of an instance when it would not be appropriate?

Bill O'Brien: Order. I must remind hon. Members that although they may refer to new clause 16 at this stage, they may not debate it.

Hugo Swire: I am grateful to you for pointing that out, Mr. O'Brien. The Minister prayed it in aid. However, I will not return to it.

Robert Key: My hon. Friend is absolutely right. It is not a question of forcing the Secretary of State but of encouraging people to conserve water and reporting to Parliament every three years. That is very different. I do not want to get bogged down in the semantics. We have the word of the Minister here. It is on the record. We may return to the matter later. Others may wish to return to it on Report. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Bill Wiggin: I beg to move amendment No. 47, in
clause 21, page 24, line 22, at end insert— 
 '( ) The expiry date shall take into account the availability of water in the source of supply to which the licence applies and the investment needs of the applicant.'.

Bill O'Brien: With this it will be convenient to discuss the following amendments:
 No. 49, in 
clause 21, page 24, line 24, at end insert— 
 '(5B) In determining the period that a licence under this Chapter shall remain in force, the Agency shall take into account— 
 (a) the life expectancy of any associated infrastructure works (existing and prospective), 
 (b) the costs of those works (actual and projected), and 
 (c) the period over which those costs may reasonably be expected to have to be recovered.'.
 No. 50, in 
clause 22, page 25, line 16, at end add— 
 '(5) There shall be a presumption that any licence in respect of which the conditions of this section are met shall be renewed unless the Agency is able to show that revocation is necessary in order to protect any waters or underground strata, or any flora or fauna dependent on them, from serious damage.''.'.

Bill Wiggin: This is a very serious part of the Bill. I am sure that the Committee will give it proper consideration. The investment necessary to abstract water, to put a bottling plant together, to set up a quarry, is wholly reliant on the ability to have a licence to abstract water. It is vital that we take into consideration the amount of water that is available. Once again, we come back to the same old dilemma: does the Environment Agency put the environment way above the interests of other people or does it have a duty to be proportionate in its judgment?
 Amendment No. 49 would ensure that the agency took into account the life expectancy of associated infrastructure works. The cost of pipes may be quite low, relative to a reservoir or a bottling plant, but those pipes may last hundreds of years rather than just seven or 12 years. Indeed, some of the sewers beneath our feet are Roman. It would also take into account the cost of the works, actual and projected, and the 
 period over which they may reasonably be expected to have been recovered. We need to ensure that all those factors are proportionate. As they stand, the licences seem to be a little bit short. 
 The Minister said that it was a matter of judgment. It is not just judgment. There are standard procedures over which these costs are measured. When one buys a house, one is normally offered a mortgage that lasts 25 years. This is the same type of financial arrangement. Any institution lending money to a company seeking to do any sort of work of this nature would be looking at a much longer period than 12 years, particularly as the equipment lasts so much longer. 
 Once again, we want to ensure that the Environment Agency does not close down businesses before due time. It is illogical. The Environment Agency may determine that it is reasonable to authorise the abstraction up to a specified quantity of water. It may then also specify a lower quantity down to which the licence may be varied without payment of compensation. I want that point, as well as the minimum values, taken into consideration. It is difficult to explain minimum values, but I am sure that the Minister understands them, and the amendment is designed to ensure their consideration. 
 Once the Environment Agency has taken into account the infrastructure, costs and investments associated with abstraction, it should then decide the life of the abstraction licence. That would provide many benefits. We would have a clearer and more consistent framework for decision making that would take into account the life of the assets to be abstracted, and a reduction in costs. It would also lead to the maintenance of secure water supplies for customers over a reasonable time span and appropriate capital investment that would ensure a focus on social, environmental and economic benefits—a demonstration of sustainability in action. 
 The British Soft Drinks Association is extremely unhappy about the matter. The association has a huge bottling infrastructure, unlike quarries or and most other abstractors, such as farmers. The quality of the water is fundamental, but the majority of the work, once the water has been taken out of the ground, is involved in the bottling process, the packaging, and ensuring that the bottling equipment is clean and there are no impurities. I visited several factories, and although they are mainly packaging operations, they depend on lots of machinery and the costs are extremely high. In the two bottling plants that I visited, I am sad to say that most of the machinery was made in Italy rather than Britain. 
 Nevertheless, British bottled drinking water is a tremendous success story, with 1.4 billion of the 1.8 billion litres drunk here in a year produced in the UK. That figure is growing and has doubled over the past six years. We must consider that type of investment when dealing with the length of licences and, more importantly, compensation when licences are cancelled.

Elliot Morley: The soft drinks sector and water bottling companies already have abstraction licences. Those are full licences that will continue in perpetuity, and the Bill will not change that. The Bill will change the compensation arrangements but not the length of licence for those who already hold one. Companies may wish to transfer to time-limited licences, and that is a choice that they can make. If they want to expand their businesses, they may seek a variation or a new licence, which would be time-limited, but the Bill will not remove their current right of perpetuity. However, new issues, such as transfer licences, have emerged.
 Amendments Nos. 47 and 49 would impose particular considerations in specifying the expiry date. Incorporating criteria such as a fixed duration or the need to relate it to asset lifetime criteria could override other criteria, not least environmental considerations. For sustainability, there must be a balance between economic activities and environmental considerations, but this is a resource management Bill so it must have tools and powers for resource management. It would be unacceptable to override environmental considerations simply on the grounds of asset life. 
 The Environment Agency already has duties under the Water Resources Act 1991 to consider impacts on water resources when determining an application for an abstraction licence. It will use information from the relevant catchment abstraction strategy to do that. It must also take into account the needs of an abstractor as part of the test of reasonable requirements for the licence. 
 The agency recently published extended guidance on how it will address the duration of licences. The guidance states that licences longer than the normal 12 years can be considered provided that they meet the criteria of the four tests in the Government policy document ''Taking Water Responsibly''. 
 The first test is whether the lifetime of the infrastructure inseparably associated with the authorisation will extend over the desired period of validity. That may cover some of the hon. Gentleman's points. The second is that there should be a continued need for the service or product associated with the infrastructure throughout the desired period of validity; the third is that the fullest possible appraisal of likely changes in environmental and economic circumstances that may have a bearing on the acceptability of abstraction over the desired period of validity has been carried out and shows no significant concerns; and the fourth is that the infrastructure development contributes to sustainable development, which also touches on the hon. Gentleman's point. 
 Those are four very good tests to determine whether there is a basis for a longer period of abstraction licence. The agency has already said that the average period will be 12 years but it can set shorter or longer periods. I have outlined the criteria that it will use when deciding whether there is a case for a longer period.

Bill Wiggin: I am grateful to the Minister for reading out the criteria, and he is right to draw the
 Committee's attention to the four tests, but if they are so good they should be in the Bill—and they are not. He argued, first, that the asset life should not be identified or examined without paying due consideration to the environment. The amendments do so; we are not asking the Government to put it in the Bill that the asset life alone should be considered. We want it to be part of the environmental consideration.
 We must bear it in mind that companies that are quarrying cannot abstract rock without pumping water out; if the licences and the compensation that goes with them serve to put a brake on the Environment Agency, that has an environmental impact, too. If a company is extracting rock and cannot go further down, it may be able to go sideways, which will make a much bigger hole in the ground, with the potential for a much worse environmental impact. We therefore have much to consider. 
 If the Minister is happy with the four tests, they should be in the Bill, in which case the amendment would be superfluous.

Elliot Morley: I do not agree with the hon. Gentleman's point about the amendment, because of the restrictions and the change in balance involved. On the issue of compensation for environmental damage, that is part of the consistent approach of the ''polluter pays'' principle. There can be no compromise in that respect. If people are worried that their current abstraction licence may fall within the criteria, they can switch to a time-limited licence, which has a compensation element, unlike those issued in perpetuity. That is one reason why people may want to switch. However, it depends on the circumstances. It is a question of being reasonable and applying the criteria in a sensible way. The agency has to take into account the infrastructure, the investment and the economics. If it does not, it is open to challenge and to appeal.
 Amendment No. 50 would significantly limit the Environment Agency's ability to refuse to renew a licence to a narrow set of circumstances and affect its ability to manage the resource's sustainability. As ''Taking Water Responsibly'' makes clear, there is a presumption in respect of the renewal of time-limited licences. I stress that again. I know that it is not in the Bill, but it is in the document, which is supported by the legislative framework. 
 The guidance that I referred to earlier also deals with the renewal of licences, for which there are three tests. The first test is of ongoing need for the licence, which can be clearly established. The second is an efficient-use test. Bearing it in mind that we are debating resource management legislation, it is not unreasonable that licensees should demonstrate that they are using water efficiently. The third test is environmental sustainability. Those are not unreasonable tests for renewal, and I would have thought that most people would not have any difficulty with them. 
 Part of the problem when moving to a new system is the fear of the unknown, but that fear is being exaggerated. Generally speaking, we would expect 
 licences to be renewed unless there is a very good reason not to do that. That is laid down in the criteria, ''Taking Water Responsibly'' and the agency guidelines. Those safeguards recognise the legitimate needs of the industries that have to abstract water. We do not have any problem with that, and the Bill balances the needs and rights of abstractors and the duty on the Government and agency to ensure sustainable water management. 
 With all respect to the hon. Gentleman, I do not think that the amendments achieve that balance. However, I understand the hon. Gentleman's points, and I hope that by spelling out the detail, particularly on the criteria in ''Taking Water Responsibly'', I have assured him that we take them seriously and have addressed them.

Bill Wiggin: I should like to pick up on a couple of the Minister's points. First, he emphasised the importance of the ''polluter pays'' principle. That is well understood, and inevitably the customer will pay. However, I was worried when he said that if an abstractor felt that it might be sailing close to the wind, it should move towards a time-limited licence, which comes with compensation from the Environment Agency. The purpose of the legislation is to prevent people from polluting in the first place, so we should not be moving the guilty into the safe haven of time-limited licences.

Elliot Morley: The hon. Gentleman is seriously misrepresenting my meaning. I am not suggesting that people who believe that they run the risk of having their licence taken away because of environmental damage should simply switch to time-limited licences. Indeed, that would not work. There is a compensation element to the time-limited licences because they are set according to the resources available and the Environment Agency assessment. If the agency somehow got that wrong, there would be an element of compensation. That is the difference.

Bill Wiggin: I thank the Minister for that intervention, but it was not what he said earlier.
 The second point was about the presumption of renewal. If I asked the Minister to lend me some money on the presumption of repayment, he might consider a tenner fair enough, but when I ask for hundreds of thousands of pounds, he might think that I will disappear before repaying. We are dealing with trust. It is not fair to say that the presumption of renewal is implicit in the Bill, or for the Minister to read out two sets of criteria to give companies comfort on the basis that they have a presumption of renewal, but not to include either set in the Bill. 
 We are asking investors to take a great leap of faith, which is not reasonable, fair or proportionate. The Bill is designed to protect the environment. No one is suggesting that that is wrong, but we want to ensure that the people who are abstracting and who will be most affected by the legislation are properly protected financially. 
 I accept the Minister's point that the amendment's wording is not quite right, but I have offered him 
 several alternatives. He should publish the criteria or put them in the Bill, so that people know where they are. As soon as they know that, they can put their fears aside and carry on their business safely, sensibly and in a manner that is helpful to the environment. The Bill is not quite right and I am offering alternatives. I hope that the Minister will consider the wording of the amendment, if that is what is wrong, and put it right, because the presumptions of renewal need to be clear and they are not at present.

Elliot Morley: The criteria and other details are published in policy documents and strategies, because they can be consulted on. Indeed, they may change over time as a result of consultation. If we put the presumption of renewal in the Bill, we would need a list of all the situations in which the presumption would not apply. That would be a real problem, because we would have to try to think of every possible scenario or case in which there might have to be an exemption.

Bill Wiggin: I fully recognise the difficulty of legislating in that way, but the Minister has offered the choice of a code of conduct of some sort. It will take into consideration the criteria that he nailed down. That work will take place, whether we put it in the Bill or not, so we should put it in the Bill.

Elliot Morley: If it is in the Bill, it becomes part of the legislation, which makes it very rigid. The problem is that although we can anticipate some situations in which environmental sustainability may prevent licence renewal now, it is difficult to anticipate cases that may arise in future. The advantage of having the measure in documents such as ''Taking Water Responsibly'' is that it can be changed, and changed both ways—following representations from users or from, say, the Environment Agency. That is a much more responsive way to deal with matters than putting them in the Bill and making everything rigid. Trying to change such measures at a later date is very difficult, as we all know. That is why we have approached the measure in this way.

Bill Wiggin: The Minister is absolutely right. He has put his finger on the whole situation. The reason why we will not publish any of these things is that if we deal with them as he suggests, we can change them. However, that is a fundamental problem for anyone investing in any of the businesses. Because the measures can be changed, they do not want to invest. The situation is as simple as the Minister makes it. That is why I am wholly unhappy with his responses.

Elliot Morley: The hon. Gentleman is taking this too literally. There are some fundamental principles, such as the presumption of renewal. I am talking about the criteria that are applied so that people understand how renewal will apply. I am talking, for example, about how the power to extend the time limit beyond the average of 12 years will be applied. There is the power to do that; it is laid out clearly how that will be done. Those are safeguards for people who need abstraction licences. We are not trying to undermine that in any way.

Bill Wiggin: We have done as much as we can. I simply do not agree with the Minister. I do not think that he fully understands the attitude that investors require from a Government before they invest in this type of business. When you give these powers to the Environment Agency, you are threatening people's life savings, their pensions, everything. You are—

Bill O'Brien: Order. I can assure the hon. Gentleman that I am not threatening anyone.

Bill Wiggin: Thank you, Mr. O'Brien—although I worry about your pension, too.

Bill O'Brien: I do, too.

Bill Wiggin: The point is that this series of amendments may not be perfect in every way, but they would ensure that the presumption of renewal and the compensatory element stayed in the Bill. The criteria that the Minister mentioned would have done instead, but he has chosen not to publish them, so I urge the Committee to support the amendment.
 Question put, That the amendment be made:–
The Committee divided: Ayes 7, Noes 12.

Question accordingly negatived.

Norman Baker: I beg to move amendment No. 140, in
clause 21, page 24, line 26, at end add— 
 '(6) All licences which were hitherto expressed under section 46(5) of the WRA as remaining in force until revoked shall, over a 6 year period beginning on the 15th July 2012, be reissued to state— 
 (a) the date on which they take effect, and 
 (b) the date on which they expire.'.
 As we have considered the Bill, the Minister has been keen to talk about the balance between the needs and rights, on the one hand, of abstractors, and, on the other, of those who wish to protect the environment, and of the environment itself. The most recent discussion concentrated on the consequences for abstractors, but I now want to examine the consequences for the environment if we continue to have large numbers of permanent licences. 
 The hon. Member for Salisbury (Mr. Key) commented earlier that 90 per cent. of licences are permanent. That could put a gaping hole in the achievements that the Government want from the Bill. There may be provisions for revoking the most environmentally damaging licences, but implementation of those provisions will be costly and time consuming, and they may not be used frequently. That is not the means by which abstraction should be put on to a sustainable footing. 
 It is necessary to include in the Bill a mechanism that will convert so-called permanent licences to a time-limited status, thereby introducing greater flexibility into the licensing system. I believe that to be vital if future abstraction management is to take account of factors such as climate change and increasing pressures on water resources, particularly in my constituency and elsewhere in the south-east. I suspect that the Minister agrees with me. 
 I draw the Minister's attention to article 11.3(e) of the EU water framework directive—the parallel legislation that we are not allowed to mention in this Room—which will require abstraction licences to be ''periodically reviewed'' to meet European standards. That requirement of EU legislation is not provided for in the Bill, or it is not provided for in a manner that is adequate to meet the requirements of the directive, let alone the environmental requirements. We therefore need a clear steer towards a flexible system of more easily variable time-limited licences. The continuation of permanent licences without such a timetable does not meet that EU requirement. 
 The Minister spoke about voluntary conversion from permanent to time-limited licences. I have waited with interest to ask him about that because my predecessor in my role, my hon. Friend the Member for Gordon (Malcolm Bruce), asked about that in July 2002. His question was: 
''To ask the Secretary of State for Environment, Food and Rural Affairs how many abstraction licence holders have voluntarily converted their licences of right to time limited licences since the publication of Taking Water Responsibly.''—[Official Report, 18 July 2002; Vol. 389, c. 487W.]
 The answer given by the Minister's predecessor was, ''None'', so that method does not appear to be very effective in persuading abstractors to change from permanent to time-limited licences. After all, there is no reason for them to change if they perceive it to be in their interests to stay as they are. There must be some mechanism to persuade people to change—either a carrot or a stick. Can the Minister give us an update on that, and tell us whether any abstractors have voluntarily changed since July 2002? Perhaps his officials will know, but at that time there were none. 
 A voluntary approach gives no incentive for abstractors to convert their licences, and nothing that the Minister has said so far has changed my view on that. In the amendment that I have tabled with my hon. Friend the Member for Guildford we suggest that there should be a six-year transition period for the conversion of abstraction licences to time-limited status. That would begin in 2012, which is also the date beyond which compensation will not be payable for the revocation and/or variation of licences in cases of serious environmental damage. That is a legitimate period to set; it is a long time in the future. We also chose that date because it may overcome any challenges under the Human Rights Act 1998. 
 There is an issue about taking something away from people to which they have had a right, and we should acknowledge that across the Committee. I have served on the Human Rights Committee and I am aware of those sorts of issues coming up. I do not think that the Human Rights Act, in my humble interpretation of it, 
 gives individuals the right to behave in an environmentally damaging way in perpetuity. It is reasonable to give people time to adjust, and in these circumstances 2012 is a reasonable time by which to do so. Does the Minister believe that there is a Human Rights Act implication here, or does he accept that the time scale that I have set down would overcome any possible challenge? 
 I read the Report stage of the consideration of the Bill in the Lords, where the point about there being no incentive to convert from permanent to time-limited licences was raised. Lord Whitty said: 
''There are a number of measures and features of the new system that will encourage such voluntary conversion. For example, the agency will introduce financial incentives to convert, such as differential charging according to licence status.''
 It would be helpful if the Minister could tell us more about that so that we knew how much of an incentive it is. Lord Whitty continued: 
''It will be consulting on a new charging scheme in the autumn. Moving to a time-limited licence where at least six years' notice of non-renewal is given will, in future, offer more security, rather than less, than retaining a non-time-limited permanent licence that could potentially be subject to revocation without notice. Removing the right to compensation where a permanent licence causes damage to the environment should also act as an incentive to conversion.''—[Official Report, House of Lords, 12 June 2003; Vol. 649, c. 408.]
 Lord Whitty therefore attempted to give some reasons why voluntary conversion will take place. I am not convinced that—[Interruption.]

Bill O'Brien: Order. We have some competition. The hammering from next door is making it difficult to concentrate on the debate. The Doorkeeper has gone to investigate. The hon. Gentleman may continue.

Norman Baker: I was saying that in the absence of any evidence to the contrary from the Minister, I do not believe that a rush of people want to convert from permanent to time-limited licences. I should be interested to know how many have done so in the last year. Lord Whitty set out means by which some people may be encouraged to convert. We have to understand the financial incentives to gauge whether those will be successful, but they do not represent a strategy for converting from permanent to time-limited licences, and a strategy is needed. It must either be an effective voluntary strategy or what we propose in the amendment, which is fair and balanced. It would protect the environment without infringing people's human rights, and it sets a fair timetable for achieving what I think the Minister wants.

Elliot Morley: I can confirm that that is exactly what I want to achieve. Ultimately the Government would like all abstraction licences to be time limited. We make no secret of that. Our preferred method is predominantly voluntary. We want to encourage people to move over. The hon. Gentleman is right to say that one way the agency can encourage that is through a differential price. The annual fee for the time-limited licences will be lower than that for the permanent licences.
 I also stated that compensation for permanent licences will end in 2012, but there will be provision for 
 compensation in time-limited licences because, in setting the time, that test has to be met. If the test is wrong or some issue arises, there is the potential for compensation, which reassures some people. The Government also believe that such an automatic conversion would breach the Human Rights Act. Compensation would potentially be payable for all licences that were compulsorily changed, which would have enormous cost implications. The conversion mechanism would involve the agency having to propose variations on each and every licence, and each and every licence holder could appeal, if they wished. Desirable though that might be, dealing with that would tie the agency down for years. 
 On the balance issue, all new licences are time limited and have been for the past two years. The Bill imposes a duty on the agency to issue time-limited licences only—that is all that will be available from now on. As we have discussed, different kinds of temporary licence will be available, and holders of permanent licences can transfer voluntarily. Licences not being used will be extinguished in four years; that will be another way of reducing their number. There may eventually be a case in some areas for subjecting existing licences to a time limit. Before 2012, compensation would have to be paid in those cases. Where there is environmental damage, the impact of the damage might mean that there is a case for time limiting licences now rather than waiting until 2012.

Hugo Swire: If environmental damage can be proven, presumably the licence can be rescinded anyway.

Elliot Morley: Yes, it can. The point is that if the licence is rescinded before 2012, in an urgent situation, under the existing powers, compensation must be paid even if environmental damage has occurred. That is the only difference. Indeed, a licence can be rescinded and a time-limited licence issued in its place. That does not necessarily mean that the licence holder will stop abstracting; that depends on individual cases. The licence holder may have to reduce the abstraction, for example; the amount may have to be varied or, in odd cases, abstraction may be totally inappropriate and too damaging. We have to face up to the fact that in such cases, under existing powers, compensation has to be paid when a licence is rescinded.

Robert Key: Please can the Minister explain what is the advantage for someone who holds a licence in perpetuity of converting voluntarily to a time-limited licence?

Elliot Morley: There are a number of advantages. Let me give an example. Someone has a licence as a landowner and is abstracting from a good aquifer; they are confident that there is no environmental damage and that they do not risk a restriction or a licence renewal refusal. As I pointed out, there is a presumption of renewal. The longer the measure applies, the more comfortable abstraction holders will feel with the regime. The regime is designed not to restrict every abstraction licence holder, but to have proper management. The person is confident and comfortable with that; they pay a higher charge for their licence in perpetuity than for a time-limited
 licence; they know about the presumption of renewal, and there is no reason why they will not get a renewal—so why not switch and enjoy the benefits of the lower charge?

Robert Key: That is very helpful. Can the Minister give any indication of the scale of the difference in charges? How significant would that be for a small business such as a watercress grower?

Elliot Morley: Before we frame those charges we want to give people an opportunity to comment in proper consultation, which will take place this autumn. I am sure that businesses such as watercress growers will have an interest in that.

Norman Baker: The Minister is arguing persuasively that people may wish to change from permanent to time-limited licences. Can he answer my earlier question and tell the Committee how many have so far voluntarily changed?

Elliot Morley: I should be surprised if there has been any change to the last answer that the hon. Gentleman received.

Norman Baker: None.

Elliot Morley: That is right. But the framework to encourage that change is not yet in place; it will be put in place by the Bill. Once that is done, people will make that voluntary move, and licences that are not being used will be withdrawn. As I said, we have asked the agency to undertake a programme of prioritised conversion of licences to time-limited status where costs are proportionate to the benefits—that is, where severe damage is being caused. It will consult on the programme when the Bill has been considered.
 We are not simply waiting for 2012, when there may be a need to take action in a small number of cases. With the range of measures that the Bill puts in place there will be a genuine inducement for people to switch to time-limited licences. I am confident that for the majority of licence holders there will be no problem with the renewal of time-limited licences. Of course, change is unsettling, but I am confident that when the measure has been running for a few years, people will have no concerns about it.

Hugo Swire: Can the Minister cite a precedent, off the top of his head, in which public money was employed to persuade, or bribe, people to give up something that they thought they had obtained in perpetuity, in order to have something that would be licensed at the Government's whim every four or five years?

Elliot Morley: Yes, there are a number of cases, and I can give the hon. Gentleman one example off the top of my head. The Government laid out between £12 million and £15 million to buy up legally held mineral rights to peat extraction because of the environmental damage that was being caused. Despite causing damage, the company concerned was not doing anything illegal because planning permission had been given a long time ago. It was working within its rights in respect of its mineral permissions, and the Government bought those rights to prevent further damage.
 I would rather not do that. As I said, compensating people who cause environmental damage is not an 
 appropriate use of public money. In the case that I cited, the company could not be blamed because it had secured rights, fairly and squarely, in the process that had applied many years ago. That was a fact of life. Some licences may be causing damage; they will have to be rescinded and compensation may have to be paid. That is why I asked the agency to make a prioritised list, and that is why the powers in the Bill will improve our management of important water resources.

Norman Baker: I hear what the Minister says; I suppose that the jury is out on whether the measures—the carrots—that Lord Whitty and this Minister have mentioned will be successful. If they are to be successful, there will have to be considerable financial inducements to persuade people to give up permanent rights in exchange for those that are time limited. If those financial inducements are attractive, there will be a reduction in moneys to the Government, which will be as much of a loss to the taxpayer as compensation payments. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 21 ordered to stand part of the Bill. 
 Clause 22 ordered to stand part of the Bill.

Clause 23 - Modification of impounding licences

Bill Wiggin: I beg to move amendment No. 39, in
clause 23, page 25, leave out lines 27 to 34.

Bill O'Brien: With this it will be convenient to discuss amendment No. 199, in
clause 23, page 25, line 34, at end insert— 
 '(1BB) The Secretary of State may by regulations make provision for the form and contents of notifications to a licence holder of conditions required by subsection (1B) above.'.

Bill Wiggin: The amendment is designed so that the Government can clarify the reason that in
''the case of a licence to obstruct or impede any inland waters, a variation may take the form of a requirement that the impounding works be modified in ways specified in the proposed new provision of the licence.''
 That is harsh; either a licence is acceptable or it is not. It is an unnecessary provision, and that is why I want to delete it. 
 Watercress growers, to whom my hon. Friend the Member for Salisbury referred, impound water with which to wash their watercress beds. If they are told to modify the impounding works, their business might collapse. Such modifications would also be unnecessary for other businesses, but in some cases it will be impossible to gain a licence unless modifications are made. That is implicit in licence applications, which is why the provision is not necessary.

Sue Doughty: We, too, have concerns about the obligations on licence holders, and I listened with interest to the hon. Gentleman's introduction. Although we have not asked for the deletion of the lines referred to in amendment No. 39, we feel that there must be clarity for licence holders. They must know what will be expected of them, what the financial
 implications will be and what site restorations will be required. We accept that it would be unreasonable for such a provision to be included in the Bill, but it could be made by regulation, which would provide more opportunity for consultation on what might be reasonable. Businesses such as watercress growers need greater reassurance about where they stand, and such a lack of clarity is not good for them. They need to know the implications of the clause.

Elliot Morley: Perhaps the hon. Lady misunderstands the intentions set out in the clause. The agency currently has no option but to revoke an impounding licence at the holder's request. That could allow conditions of such licences—for example, to maintain flows downstream for other river users—to be avoided. The owner of an impounding works that is expensive to maintain could say, ''I do not want this anymore, I want the licence to be revoked,'' and the licence would have to be revoked, even if the works were beneficial to the management of the watercourse.
 The clause will allow the agency to attach conditions to the surrender of the licence. For example, it could ensure that, if necessary, the impounding works are removed—another reason that someone might want to revoke a licence—or modified to ensure that they cause no problems for the environment or other abstractors. If the licence holder is dissatisfied with the conditions for revocation, there is a provision for them to appeal. In setting such conditions, the agency will consider issues such as the impact on river flows, abstraction rights and the environment. In some cases it might be best to preserve impounding works to maintain flows, and in others the structure might be removed. It would depend on the circumstances, and the clause gives the agency flexibility to do that. Amendment No. 39 would remove the ability to apply those conditions and damage the agency's ability to respond. 
 Amendment No. 199 would introduce an unnecessary bureaucratic requirement for the Secretary of State to prescribe the form in which licence holders are notified of conditions to be met prior to a licence being revoked. It would also enable the Secretary of State to constrain the parameters of conditions that the agency must set. If the agency is perceived to be acting unreasonably, the licence holder will have a right of appeal, so the amendment is unnecessary and I hope that the hon. Member for Leominster (Mr. Wiggin) will not press it.

Bill Wiggin: I was especially impressed that the Minister was able to respond even though I read out part of clause 24 instead of clause 23. Fortunately the wording is almost identical, and I thank the Minister for dealing with the nub of the problem. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Bill Wiggin: I beg to move amendment No. 40, in
clause 23, page 26, line 21, leave out subsection (5).
 This amendment is somewhat different. Subsection (5) irritatingly refers to subsection (6) of section 52 of the Water Resources Act 1991, some of which the Government are deleting. The passage to be deleted says: 
''A notice for the purposes of subsection (4) above, in addition to any other matters required to be contained in that notice''—
 the notification of the instance of the authority— 
''shall . . . name a place within the relevant locality where a copy of the proposals, and of any map, plan or other document prepared in connection with them, will be open to inspection by the public, free of charge, at all reasonable hours during a period specified in the notice in accordance with subsection (7)''.
 The rest of the subsection is replaced almost identically. Why was it necessary to remove provision for what seems to be a helpful public service?

Elliot Morley: I have explained the intention of the clause in terms of applying conditions to an empowerment licence. I must admit I was surprised to find out that at present an impounding licence is required to be held only during the construction of impounding works. The holder may surrender it once the works have been completed, without any conditions being placed on it. The amendment would remove that requirement for those licences that are already in existence and allow those who have benefited from the impounding works to walk away and leave future problems for both the environment and other abstractors. I know that that is not what the hon. Gentleman was talking about, but that would be the result.

Bill Wiggin: I am grateful to the Minister for that reply—but not that grateful, because it did not deal with what has been changed by this provision. Subsection (5) says that
''the holder of the licence may give notice in writing . . . and any other person may make representations''.
 We are dealing not with whether the impounding takes place but with the notification that section 52 gives.

Elliot Morley: The hon. Gentleman's comments were so similar to the previous amendment that I did not notice it, but I have a feeling that they relate to another amendment.

Bill Wiggin: Amendment No. 40.

Elliot Morley: Yes, we are debating amendment No. 40, but his comments do not relate to it. Amendment No. 40 would remove the requirements in relation to existing licences.

Bill Wiggin: The amendment would delete subsection (5), which refers to subsection (6) in the Water Resources Act 1991.

Elliot Morley: It does not work like that.

Bill Wiggin: That is what I want to amend and how I drafted the amendment. All I want to know is why provision for useful information should be deleted from the 1991 Act.

Elliot Morley: The Water Resources Act 1991?

Bill Wiggin: It might be helpful to explain it again. Section 52(6) of the Water Resources Act is amended by subsection (5), and my amendment would remove that alteration.

Elliot Morley: I may be misunderstanding the hon. Gentleman, but I have a feeling that he is talking about subsection (5) of clause 24, not clause 23.

Bill O'Brien: I suggest that the hon. Gentleman can raise the matter under clause 24 by withdrawing the amendment.

Bill Wiggin: In light of what has been said, I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 23 ordered to stand part of the Bill. 
 Clauses 24 and 25 ordered to stand part of the Bill.

Clause 26 - Claims arising out of water abstraction

Norman Baker: I beg to move amendment No. 201, in
clause 26, page 31, line 29, at end insert 
 'or to their property or to both'.
 First, I want to check that ''damage to another person'' includes, by definition legally, damage to his or her property. I am sure that the Minister can assure me that that is covered, but I just wanted clarification. Secondly, do the rights included in the clause also apply to public bodies? In other words, will the definition of a person include a public body?

Elliot Morley: The clause introduces the right to sue an abstractor who has caused damage, whoever that abstractor is. Abstractors will therefore need to remain alert to the possibility that they are causing harm to others—other abstractors or the environment—if they are to avoid being subject to claims for damages. That ensures that the law relating to water abstraction is consistent with long-established rules in other areas requiring property owners and other occupiers or users of land to respect the interests of neighbours in terms of their water abstraction and the impact on the land. Subsidence could be covered by this, too. That is the intention. The amendment is unnecessary, as legally loss or damage to a person includes that person's property.

Norman Baker: That has answered one point. Just for clarification, could damage to another person be damage to a public body?

Elliot Morley: I think that damage to a public body would be covered. According to the definition and the way in which the Bill is applied, a ''person'' relates to property and can also relate to a public body.

Norman Baker: That is helpful. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Bill Wiggin: I beg to move amendment No. 41, in
clause 26, page 31, line 31, at end insert 'and the Environment Agency'.
 The amendment is not particularly complicated. It would include the Environment Agency as someone who could be pursued by someone who had suffered loss or damage. The Minister is unlikely to welcome it, but it would give abstractors extra recourse.

Elliot Morley: In granting a licence, the agency will not have considered the effect of an abstraction on property of third parties, only on water resources. That is its responsibility and all it can do, in a sense. It is charged with considering water resources and the environment. It is also important to bear it in mind that it is the abstraction of water that can cause damage, irrespective of whether it is under licence. The agency does not have a duty to have regard to any potential third party damage caused by abstractors, and that would be inappropriate. It would be inappropriate for the agency to regulate relationships between property owners or to assume the liability that abstractors should bear. It is not appropriate that the agency should be liable for any such damage, because it is the abstraction that causes the damage. The agency considers the water resources, the environment and the impact on other abstractors, but it cannot be expected to judge other potential damage. That is a matter for the abstractor, and that is where the liability should rest.

Bill Wiggin: The Minister is right, but there is a problem, which is that when one applies for a licence, the understanding is that if a licence is granted, the licence grantor has taken some responsibility for checking what they are allowing to take place. That means that if an abstractor obeys all the criteria of his licence and does what he is supposed to do and there is subsequently a claim, the licence grantor has some responsibility to have ensured that it was safe to carry on abstracting.
 I recognise that an abstractor will be responsible for any damage caused, but at the same time there is a duty on the Environment Agency to take some responsibility when granting a licence. I do not expect that the Environment Agency would be sued, but it is important that it has responsibility. That is why I tabled the amendment. 
 Amendment negatived.

Robert Key: I beg to move amendment No. 224, in
clause 26, page 31, line 40, at end insert— 
 '( ) For the purposes of this section ''loss or damage'' shall not mean any diminution in the value of land'.
 The watercress beds of Hampshire and Wiltshire were developed more than 100 years ago. As a result of the construction of the railways and access to new markets, there was new pressure on watercress growers. They needed more watercress, and the production had to be more consistent throughout the year. It was not just a question of gathering it conveniently in bunches and using it locally. The whole operation became more professional. 
 The watercress growers chose their location because of the natural springs, on which they could rely for particularly clean water to grow their watercress. When they needed to expand, they stayed put and used more water. Someone who is running a watercress business will not want to grow watercress in the river, where everything gets washed away, but in very broad, shallow growth ponds through which water trickles. 
 An example is Chalke Valley Watercress Ltd. in my constituency, which has been in the Hitchings 
 family for at least four generations. It currently has a licence to abstract 1.128 million gallons of water a day—5,127 cu m. However, water levels vary hugely. When high flows come out of the spring, it can get 4 million gallons a day, which is four times the abstraction licence. On the other hand, at dry times of the year, the flow drops right down to a mere 200,000 gallons, which is mostly lifted by pumps. There is a huge variation in the amount of water being lifted. 
 If watercress growers on chalk landscapes in the middle of a tourist area get very low flows and start pumping, the winter bourne—the stream—dries up completely. There have been cases of bed and breakfasts, pubs and hotels trying to sue for loss of amenity. The stream in front of the B and B suddenly is not there any more, and its guests are, naturally, aggrieved. That is the catch. 
 Clause 26 provides a new means for persons who suffer loss or damage arising from the abstraction of water to bring a claim against the abstractor. Previously, the grant of any licence by the Environment Agency was a defence that was accepted in law. Any action had to be taken against the Environment Agency for issuing the licence in the first place, not the owner of the abstraction licence, as will be the case now. 
 The watercress growers are concerned that they might be exposed to claims to which previously they would not have been exposed, from people who perceive that their business or property may have been adversely affected by variations in the flow of watercourses and winter bournes; hence, the wording of the amendment. This is a probing amendment. The watercress growers and I would be very grateful if the Minister would set out the reasons why they will no longer be covered and why they may now be exposed to a new legal liability.

Elliot Morley: The principal reason is consistency of approach in legislation. The amendment, as the hon. Gentleman rightly stated, would ensure that third parties could not sue abstractors for damage that results in the diminution of the value of the land. That would nullify the current purpose of the clause. It is intended to provide a remedy for third parties who suffer loss or damage as a result of any abstraction. Many relevant losses may well relate directly or indirectly to the value of land, such as harm caused by subsidence. It would not be fair to the owner who had suffered damage to limit losses in this way. We are trying to look at all eventualities. I know that the hon. Gentleman was concentrating specifically on watercress.
 Currently an abstractor has a defence against legal action if the abstraction was made in accordance with the provisions of the licence. That is what we are trying to change. In no other similar licensing system does a licence provide a defence against legal action between individuals.

Bill Wiggin: If I painted my house a colour that my neighbours considered repulsive, it would affect the
 value of their properties, but I would be allowed to do it because I do not require planning permission to paint my house. The Minister has missed the point about this amendment, which is very valid. Diminution in the value of the land is not the same as loss or damage. If the stream in front of someone's house dries up, there is no damage. Their only claim against the abstractor would be for a loss of value in the land. That is the difference.

Elliot Morley: I understand that point, but one would be pushed to prove that there is loss or damage to the land if a small stream dries up. Again, I am not a lawyer. That is a matter in the end for the courts to decide.

Norman Baker: I am listening to this with care. I am slightly concerned. The licence regime to date has been rather looser than the licence regime that the Minister wants to put in place. He wants to tighten it up with time-limited licences and more consideration. One might argue from a legal perspective that a new licence should give more protection than an old licence. The abstractor who has gone through the process of getting the new licence would have reason to conclude that there would be no external damage because the Environment Agency had expressly authorised it.

Elliot Morley: We are back to the problem raised by the hon. Member for Leominster. The Environment Agency is not equipped to make those assessments. Its responsibility is limited to the environment, water management and the effect on abstractors. Unless streams dry up seasonally, which many do, draining a stream is not desirable. I do not see how one could blame an abstractor for affecting such a stream if it is a normal seasonal flow.

Norman Baker: The Minister said earlier that he was not aware of a situation where a licence granted is a defence in law. I am not sure that that is true. If an ice cream vendor is granted a licence to sell ice creams from a van outside someone's house, the owner of the house has no comeback, because the vendor has been given permission by the council to stop there. That is one example. In my constituency, someone will probably get a theatre licence to hold an open-air performance very close to some houses. I am not aware that people in those houses will have any comeback, because the organisers have gone through the process and gained a theatre licence from the local council. I believe that licences can be a defence. People cite them when they are subject to legal challenge.

Elliot Morley: After saying that there were cases of exemptions, the hon. Gentleman then convinced himself that there were not. The examples he gave were not very good. A better example is planning permission. Planning permission does not allow a developer to cause damage to other property owners, such as by digging foundations. Other owners would have recourse in law for the damage caused by that. A licence to discharge pollution does not allow licensed polluters to cause damage to other people by that pollution. There is still a liability on them. The clause simply brings the licence within the same remit as that which applies to other licences. That is not a particularly sinister suggestion, but again it requires
 a focus on those people who hold abstraction licences, to ensure that their activities are not damaging. That is one of the functions of the Bill in relation to sustainable management. Therefore, in the interests of sustainability and preventing damage, I hope that hon. Members will support the clause and not the amendment.

Robert Key: I am grateful to the Minister. There is no doubt that a threat to rural industry that has been around for a long time has been exposed. As I said, the amendment is a probing one. I shall go away to seek advice, and there will obviously be considerable discussion about what has been raised. If the winter bourne dries out naturally, there is no recourse, but if it dries out because someone is pumping to the limit allowed by the licence, they can now suddenly be sued. That is quite new. I feel uncomfortable when Parliament seeks to create such new situations, however logical it might be, which expose people to such danger. There is something not quite right, so I suspect that we shall have to return to the matter. Despite that, however, I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Bill Wiggin: I beg to move amendment No. 52, in
clause 26, page 32, line 15, at end insert— 
 '(8) It shall be a defence to proceedings brought under this section that the abstractor was abstracting the water in accordance with the provisions of a licence granted under this Chapter.''.'.

Bill O'Brien: With this it will be convenient to discuss clause stand part.

Bill Wiggin: My hon. Friend said that we would return to the issue, and I think that we are doing so immediately with this amendment. The argument that he presented so well is that loss or damage has nothing to do with diminution in the value of land. We have moved on now. The hon. Member for Lewes (Norman Baker) said that as we have tightened up the difficultly of getting a licence, so the licence issuer should carry more responsibility.
 The amendment would ensure that the fact that the abstractor was abstracting the water in accordance with the provisions of the licence granted would be a defence to proceedings brought under the clause. Our argument has covered the issue well. However, the Government have a duty to protect people who do what they are supposed to do and comply with the rules. The agency currently employs about 11,500 people.

Elliot Morley: Fine people.

Bill Wiggin: Indeed—they are fine people. The agency is better equipped to decide whether damage is likely to be caused than the single abstractor who might be doing nothing more bizarre or illegal than something that has been done for hundreds of years. The amendment would therefore be useful.

Elliot Morley: I do not want to go into the arguments, because the same ones apply. However, I should like to throw in another point that the hon. Gentleman might like to consider. If he had his way in relation to the Environment Agency having some liability, it would inevitably apply the strictest
 conditions to any licence to minimise any risk to itself. That would be undesirable and make the whole system unworkable. I come back to the point that if you have a licence, it does not exempt you from damages if you cause damage yourself—

Bill O'Brien: Order. I must draw the Minister's attention, as I did with that of the hon. Member for Leominster, to the fact that I am not the one who is requesting the licence.

Elliot Morley: I do apologise for drifting off into that, Mr. O'Brien. I was discussing whether holding a licence creates an exemption from damages. An example might be that a driving licence does not give anyone any exemptions from any damages that they might cause as a result of holding that licence. They are still liable.

Norman Baker: If I may say so, that is a ridiculous comparison to make. A driving licence is a demonstration that a person has passed a necessary test and is equipped to drive on the road. The Environment Agency would not grant a licence by issuing a piece of paper and saying that you could go away and do what you wanted. When I say ''you'', I do not mean you, Mr. O'Brien, I mean ''one''. Rather, a licence will come with conditions: the Environment Agency is bound to say, ''Thou shalt not this,'' and, ''You must do this in a particular way.'' The Environment Agency does not hedge round the conditions on how people operate, because it is protecting the environment and trying to make it better—that is what it is there for. So, it seems unfair to use the analogy of driving licences.

Elliot Morley: It is better than ice-cream vans.

Bill Wiggin: On a point of order, Mr. O'Brien. I wanted to include the Environment Agency as liable through amendment No. 41. This amendment would not do that, but it would protect people so that once they have applied for a licence they have complied. I refer the Minister back to the clause in question.

Bill O'Brien: That is not a point of order; it is part of the debate.

Norman Baker: The example of the ice-cream van, which I came up with off the top of my head, was not that bad. It was a better comparison than that with driving licences.
 I understand the Minister's points, and no one would pretend that they are not logical and do not have some justification, but does he feel uncomfortable, as I do, about an arrangement whereby somebody acts appropriately, goes through the proper procedures, obtains a licence, sticks to its conditions and yet can still be exposed to legal action? Apparently, the fact that they have done everything asked of them is not a defence.

Elliot Morley: I repeat that I think that the clause brings this form of licensing in line with existing forms and makes it consistent.

Bill Wiggin: The Minister mentioned driving licences, but, if they are in accidents, those who choose to drive without licences are punished much more severely than those who hold licences. That is the system that the amendment would create. If someone
 plays by the rules, they should be protected by them, but that is not the case at the moment. Unless the Minister will reconsider the intention of the amendment, I will press for a vote.
 Question put, That the amendment be made:—
The Committee divided: Ayes 7, Noes 11.

Question accordingly negatived. 
 Clause 26 ordered to stand part of the Bill.

Clause 27 - Compensation for modification of licence on direction of Secretary of State

Sue Doughty: I beg to move amendment No. 141, in
clause 27, page 32, line 30, leave out subsection (2).

Bill O'Brien: With this it will be convenient to discuss the following:
 Amendment No. 42, in 
clause 27, page 32, line 30, leave out 'four' and insert 'six'.
 Amendment No. 228, in 
clause 27, page 32, line 30, at end insert 
 'except in the case of licences where water would otherwise be abstracted for use on land which is subject to phytosanitary restrictions.'.

Sue Doughty: Sadly, we return to the vexed question whether the time period should be four, six or seven years. There are various reasons, such as agricultural practices, to delete subsection (2), which changes the time period to four years. Clause 27 reduces the period of non-use of a licence from seven to four years, after which time revocation or variation does not entitle the licence holder to compensation.
 In some situations, it would be good agricultural practice not to abstract water for at least seven years or maybe longer. Problems such as disease control might lead to water not being abstracted and they must be addressed. In the case of watercress growers, the specifications of supermarket contracts demand that the water must return to its previous quality before it can be abstracted. Again, the question of compensation arises. Farmers and growers should not risk losing a right to compensation after only four years of non-use. Despite the long and tortuous debate this morning and in previous sittings, we will pursue the amendment until we hear what the Minister is going to do about the matter.

Elliot Morley: Currently, if a licence has not been used for seven years it can be revoked or varied and the holder is not entitled to compensation. Clause 27 reduces the period to four years. We have already had this argument. I explained that four years is a reasonable balance, given that the Environment Agency needs maximum flexibility in respect of its water management. There may indeed be very good reasons why some people want to hold stable licences—the provision of drinking water, for example—and I am sure that the agency will consider them carefully.
 Amendment No. 228 deals with issues relating to farmers who are holding a licence but not abstracting because there is an irrigation ban to prevent an outbreak of plant diseases such as potato brown rot. I am assured that the Environment Agency would take such circumstances into consideration before formulating the process to seek revocation of the licence. We are not talking about a situation in which there is no flexibility and where people's circumstances cannot be considered. Of course, special circumstances such as the one that I mentioned will be taken into account. 
 I hope that what I have said reassures the hon. Lady that four years is an appropriate time. It fits in with what we have agreed in relation to the protected rights and is consistent with other approaches in terms of the time scale.

Sue Doughty: I thank the Minister for his reply. I am pleased that he has put it on the record that the Environment Agency will take circumstances into consideration. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Bill Wiggin: I beg to move amendment No. 51, in
clause 27, page 32, line 30, at end insert— 
 '(2A) After subsection (4) there is inserted— 
 ''(4ZA) Subsection (4) shall not apply while the possibility of the abstraction of water under the licence constitutes part of— 
 (a) any water resource management scheme maintained under section 20, 20A or 20B, or 
 (b) any drought plan maintained under section 39B.''.'.

Bill O'Brien: With this it will be convenient to discuss amendment No. 54, in
clause 29, page 34, line 15, at end insert— 
 '(1A) When the holder of the licence is a company appointed as a water undertaker under the WIA, the revocation or variation will not— 
 (a) require the undertaker, in order to meet all its existing obligations to supply water for domestic or other purposes, together with its probable future obligations to supply buildings and parts of buildings with water for domestic purposes, to incur unreasonable expenditure in carrying out works; or 
 (b) otherwise put at risk its ability to meet any of the existing or probable future obligations mentioned in paragraph (a) above.'.

Bill Wiggin: I want to be sure I am on the right clause. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Bill Wiggin: I beg to move amendment No. 53, in
clause 27, page 33, line 7, at end insert— 
 '(4C) Whenever the Secretary of State determines that compensation should not be paid under this section in respect of the variation of a licence on the grounds set out in subsection (4A) above, the holder of the licence may dispute the determination by referring the dispute to the arbitration of a single arbitrator appointed by the President of the Institution of Civil Engineers. 
 (4D) When a dispute is referred to arbitration under subsection (4C)— 
 (a) the arbitrator shall take into account any representations that the Secretary of State, the Environment Agency or the Authority may wish to submit to him; and 
 (b) in making his award the arbitrator may confirm, revoke or vary the whole of the Secretary of State's determination, or any part of the determination whether the reference relates to that part of the determination or not.''.'.

Bill O'Brien: With this it will be convenient to discuss amendment No. 55, in
clause 29, page 34, line 17, at end insert— 
 '(2A) Whenever the Secretary of State determines under this section that compensation should not be paid under section 61 of the WRA in respect of the revocation or variation of a licence, the holder of the licence may dispute the determination by referring the dispute to the arbitration of a single arbitrator appointed by the President of the Institution of Civil Engineers. 
 (2B) When a dispute is referred to arbitration under subsection (2A)— 
 (a) the arbitrator shall take into account any representations that the Secretary of State, the Environment Agency or the Authority may wish to submit to him; and 
 (b) in making his award the arbitrator may confirm, revoke or vary the whole of the Secretary of State's determination, or any part of the determination whether the reference relates to that part of the determination or not.'.

Bill Wiggin: I have learned my lesson about batting away at the wrong clause. If there is a typo, it is better to quit while you are behind, rather than seeking hopelessly to sneak ahead.
 It is gravely disturbing that the compensation paid will be varied, and the arbitration in proposed new section (4C) in the amendment would be most helpful. It would take into consideration representations from the Secretary of State, the Environment Agency and the authority as well as the Secretary of State's determination, whether the reference relates to that part of the determination or not. I look forward to the Minister's comments.

Elliot Morley: Where a licence is revoked or modified, compensation is payable for loss or damage under section 61 of the Water Resources Act 1991. The same section also provides that any disputes relating to the amount of compensation may be referred to the Lands Tribunal, which is common in many issues. The tribunal is independent of the Secretary of State and has a great deal of experience in dealing with such disputes.
 Clause 27 sets out circumstances in which compensation would not be payable when a new abstraction licence is varied to a minimum amount specified in the licence itself. That provision, coupled with clause 21(3), is intended to give the agency the competence to issue licences with a duration of more than 12 years, in respect of major, long-term development. Given what was said in some earlier debates, I would have thought that Opposition 
 Members welcomed that, because it will be part of the agency's flexibility. 
 Clause 29 specifies that compensation will not be payable when a non-time-limited licence is revoked because the abstraction is causing serious environmental damage. We discussed that matter earlier. 
 Amendment No. 53 would amend clause 27 to reflect the principle that the holder of an abstraction licence should not be deprived of abstraction rights without the possibility of a hearing. Amendment No. 55 would have the same effect with respect to clause 29. The 1991 Act already provides a mechanism for a hearing in such cases. The hearing would take place when it is decided whether to vary a licence on the grounds set out in clause 27 or clause 29. It is also important to note that, contrary to what the amendments imply, section 61 of the 1991 Act does not provide for the Secretary of State to make a decision on whether to award compensation. In the circumstances set out there, that would follow as a matter of law. I hope that I have reassured the hon. Member for Leominster that there is a right of appeal, and that he will therefore withdraw his amendment.

Bill Wiggin: I am grateful to the Minister for his reply—those were the types of assurance I sought. I therefore beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 27 ordered to stand part of the Bill. 
 Clause 28 ordered to stand part of the Bill.

Clause 29 - Withdrawal of compensation for certain revocations and variations

Bill Wiggin: I beg to move amendment No. 229, in
clause 29, page 34, line 3, at end insert 
 'or such later date as the Secretary of State may by order prescribe'.
 In tabling the amendment, we seek further clarification of the drafting.

Elliot Morley: The clause introduces a new power by which, from 2012, the agency can revoke, without payment of compensation, any permanent licence that is causing serious damage to the environment. We have discussed that, and the principle behind it is understood. There is a right of appeal against the decision, either to the Secretary of State or to the National Assembly for Wales, depending on the case.
 The amendment would enable the Secretary of State to substitute a date later than 15 July 2012. There are numerous environmentally damaging abstractions throughout England and Wales, and many of those are in place for historical reasons. I said that one or two of those might have to be dealt with earlier than 2012. Some of the licences would not have been granted today, given the agency's current knowledge of water resource management. 
 Abstractors must work with the agency to ensure that environmentally damaging abstractions are replaced with a sustainable alternative. I reiterate that removal of the licence is a last resort; there may be alternatives that can be put in place through work with 
 the abstractor. We see no reason to delay dealing with the damaging abstractions beyond 2012, bearing it in mind that the notice period started from when the Bill appeared in draft form. Those who hold licences have therefore had a long period of advance notice of the changes that will take place.

Hugo Swire: What the Minister says is right, but will he make a distinction when he comes to deciding on the compensation, or inducement, that those with permanent licences will be offered in order to convert to the four-year licences? Will he make a distinction between those who have been granted permanent licences within the past four or five years, and those who have had them for 10 or 20 years? There will be a significant difference between the two.

Elliot Morley: That may well be the case. I hope that the licences granted more recently would reflect the greater knowledge and understanding of catchments and the impact on the area. It depends on the individual circumstances. Each case will be considered on its merits. There will be attempts to resolve issues through sustainable means. I would not want Members to get the impression that from 2012 there will be squads of agency hit-people going around the countryside withdrawing licences. It is simply about giving the agency proper tools for proper sustainable management.

Hugo Swire: The Minister deals with a point that I had not raised. I want to pursue the point about licensing. If, come 15 July 2012, there is a logjam in the transfer process for licences, can he guarantee that the people involved will be able to continue to operate while the change is processed?

Elliot Morley: I can confirm that. In discussions, we have already ascertained that licences will continue during withdrawal and appeal procedures.

Bill Wiggin: I am grateful to the Minister for that answer. We sought to ensure that there was some flexibility. We do not want the scenario—jokingly described by the Minister—of agency officials rushing around taking people's licences away. The amendment would have provided the extra flexibility necessary to prevent that from happening. However, this is not a make or break clause, and I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Norman Baker: I beg to move amendment No. 246, in
clause 29, page 34, line 21, at end add— 
 '(4) Where this section applies, in determining any proposals to revoke or vary a licence to abstract water, the Secretary of State shall have regard to the reasonable requirements of the abstractor, including, in relation to businesses, the existing and planned commitment of resources.'.
 We discussed this matter in some detail earlier so I shall be much quicker than I intended when I tabled the amendment. However, I cannot get by without mentioning the dreaded word ''watercress''. Everybody else has been mentioning it so I need to put it on record as well, particularly as I have been lobbied at great length by my hon. Friends the 
 Members for Winchester (Mr. Oaten) and for Romsey (Sandra Gidley), who have watercress in their constituencies. Watercress looms large in my consideration of the Bill, as it does in that of other Members. I wake up dreaming of watercress at night—well, almost.

Sue Doughty: While we are talking about Members who have been lobbying on that matter, I should mention my hon. Friend the Member for Mid-Dorset and North Poole (Mrs. Brooke), who has been lobbying on behalf of watercress growers—[Interruption.]

Norman Baker: I am not sure that there is in any watercress in Colchester, but perhaps I will be corrected—[Interruption.] The matter may well be in the next issue of ''Focus''. You should call the hon. Member for Stroud (Mr. Drew) next, Mr. O'Brien; he is shouting at the Liberal Democrats. He might wait for the by-election result tonight to—[Interruption.]

Bill O'Brien: Order. We can talk about watercress, but not by ballot.

Norman Baker: The watercress industry has been exceedingly efficient in lobbying on the Bill and we should pay credit to it for that. Members of the industry will know, more than anybody else—although members of the Committee probably now know—that watercress production is developed over many years. Beds are constantly repaired, renewed and replaced, as any structure more than 200 years old would need to be. Watercress producers finance their structures on a 50-year writedown basis and are obviously concerned about what might happen now, hence the amendment.
 Rather than repeat all the arguments, I will put on the record those that have not been made. There are environmental benefits to watercress production, not least to wildlife. I am told that some of the last populations of white-clawed water crayfish are located in watercress beds. One can also find thriving populations of brown trout, marsh pipits and other vulnerable species that choose to live in the environs of the farms. 
 If we are balancing the interests of producers with those of the environment, we must consider that if watercress producers do not have some certainty, and on that basis cannot raise bank loans, some production could move overseas to Spain, Portugal or other countries.

Robert Key: It is important that we recognise that the clause is not just about persistent watercress growers but something much bigger: the court case that was hanging over the heads of Severn Trent Water which very nearly led to the Environment Agency being sued for millions over abstraction and other issues pertaining to the length of the River Trent. So as I said, this is not just about the watercress growers; the agency is also covering its back to ensure that it avoids the possibility of being sued.

Norman Baker: That is a powerful point. I would have developed a more comprehensive argument if I had not wanted to speak to other amendments. My life
 with my colleagues would not be worth living if I had not mentioned watercress.

Bill Wiggin: I want to return to the subject of plant growers, although not to watercress growers. The habitat directive must be completed. If it is completed earlier than required, that is all well and good. But if it takes longer than that, is there not a danger that we are tied to a date while another directive is being passed which the Bill seems to have ignored?

Norman Baker: It is always a difficulty for the Government to marry up different legislation. For example, the Bill and the water framework directive do not marry up in this case, and there are similar examples in other areas. While world trade negotiations are being held, biodiversity protocols are being drawn up that are not as parallel to those negotiations as they should be. However, it is 4.46 pm, and there are other amendments to be discussed, so I will sit down and let the Minister respond to the points that have been made.

Elliot Morley: I freely acknowledge that the watercress beds can be very important to the environment. The birds in question are actually water pipits, not marsh pipits. I have seen them and can identify them. The watercress industry's environmental importance is one of the strengths of its case. I do not suggest that Members have been doing this, but we do not want inadvertently to give the impression that there are huge environmental problems with the watercress industry. I am not sure that there are, but the Bill contains mechanisms for dealing with any problem caused by any aspect of water abstraction. I make no apology for that, because it is vital that we have the tools for resource management.
 I also freely acknowledge that there are issues of investment and of people's businesses, as hon. Members have spelt out. I have every sympathy with them. That is why there are clear appeals mechanisms in the Bill, and why a licence cannot be revoked unless there is a clear case for doing so and that case can stand up to examination. The right to appeal is absolute. Anyone who feels aggrieved by the revocation of their licence can do appeal.

Norman Baker: I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 29 ordered to stand part of the Bill.

Clause 30 - Water resources management schemes:

Sue Doughty: I beg to move amendment No. 203, in
clause 30, page 35, line 6, after 'shall', insert 
 'put these arrangements in the public domain and'.

Bill O'Brien: With this it will be convenient to discuss amendment No. 45, in
clause 30, page 35, line 7, at end insert 
 'and these arrangements shall be put in the public domain'.

Sue Doughty: This is a simple, but important, amendment. Requirements are being introduced,
 especially when licences are granted, to make provision for
''the construction and installation of any reservoirs, apparatus or other works which the holder of the licence will use for the purposes of or in connection with his abstraction''.
 There is also a provision requiring 
''payments to be made by the Agency to the holder of the licence''
 and a requirement for 
''the reference to and determination by the Secretary of State or the Water Services Regulation Authority of questions arising under the arrangements.''
 At the moment, those provisions are not in the public domain. If someone upstream, downstream, or facing someone who has been given a licence with these conditions wants to question something that is affecting their land, property or environment, there is no way for them to understand the basis on which decisions will be taken. There is no reason why these provisions should not be in the public domain. It is important that people can understand what requirements have been placed on the licence holder, which is why we have tabled the amendment.

Bill Wiggin: I congratulate the hon. Lady on the brilliant wording of her amendment. She will find that mine is the same. The purpose of our amendment is to put the same wording in a different place in the sentence to ensure that the information from the Secretary of State is made available to the public.

Elliot Morley: I have made it clear that I am sympathetic to the idea of information being made available as widely as possible where that is appropriate. As the hon. Lady will understand, it is already necessary for information in agreements made under section 20 of the Water Resources Act 1991, other than commercially sensitive data, to be made available to the public. Where the information relates to the environment, a very broad term, it must be made available under the environmental information regulations. Other information will also be subject to the Freedom of Information Act 2000 when it is fully enforced. That will require a public interest test to be applied.
 In reaching a decision on a request for information, a public body has to assess whether the public interest in withholding the information outweighs the public interest in disclosing it. That is perfectly reasonable; in most cases there will be no good reason to withhold information. If the interests are balanced, the presumption is in favour of disclosure. The provision is already in place, and I hope that the hon. Members for Guildford and for Leominster, with their nearly identical amendments, will accept that.

Sue Doughty: Certainly we are grateful for the additional information that the Minister has provided about the transfer of information. It is important that it should be available. Having received that assurance, I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 30 ordered to stand part of the Bill.

Clause 31 - Water resources management schemes:

Norman Baker: I beg to move amendment No. 204, in
clause 31, page 35, line 17, leave out from beginning to 'or' and insert 'reasonable terms'.

Bill O'Brien: With this it will be convenient to discuss amendment No. 205, in
clause 31, page 35, line 20, leave out from 'on' to end of line 21 and insert 'reasonable terms'.

Norman Baker: The clause concerns referrals to the Secretary of State, and one of the triggers is when arrangements appear to the Environment Agency to be reasonable. I am trying to apply a harder test on the agency so that it does not have to determine whether something is reasonable before it is referred, but whether it is reasonable in general. That might mean the same thing, but in terms of subsequent appeals and the way in which it is considered by the Secretary of State, it would be better if it were considered neutrally, rather than in the agency's opinion, which might be at gross variance with that of the other party. I do not insist on the amendment, but that is my reason for having tabled it.

Elliot Morley: The provisions that the amendments seek to change come into effect only when the Environment Agency has already found that it cannot reach agreement with the water undertaker or other abstractor over the terms of a water resources management scheme. In that situation, the matter will be referred to the Secretary of State, which is reasonable. It is appropriate that the agency should reflect on whether it considers its terms to be reasonable before it proceeds with the referral. However, the amendment seeks to change that consideration into an objective test of reasonableness. Sometimes such tests are appropriate—one can justify them—but in this case they would have unwelcome consequences.
 If there is an objective test as to whether the terms are reasonable to be considered even before the reference is made to the Secretary of State, the only way in which the matter could be determined would be by an application to the courts. We know that the other party to the proposed agreement objects to its terms, so would not consider them reasonable. That would tend to encourage litigation rather than a reference to the Secretary of State and an appeals procedure. Despite the delay and expense of going to court, all that the court could determine would be whether the terms were sufficiently reasonable to be referred to the Secretary of State for consideration. 
 The court is not equipped to take policy decisions about water resource planning, and the management is a matter for the Secretary of State—in reality, it is a matter for an inspector, who considers the situation and advises the Secretary of State. The decision of the Secretary of State is subject to the usual safeguards, including judicial review, so the party has not lost anything by allowing the appropriate decision-making procedure to run its course before considering further action. I do not imagine that there will be many cases 
 of this kind, as the agency has a good record of reaching agreements. However, I hope that the hon. Gentleman realises that such procedures are the most efficient way of dealing with such a dispute.

Norman Baker: The Minister has persuaded me on this occasion, although I admit that it may not be the greatest achievement. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 31 ordered to stand part of the Bill.

Clause 32 - Enforcement notices, and related procedures and offences

Norman Baker: I beg to move amendment No. 206, in
clause 32, page 36, line 15, leave out 'significant'.
 I wanted to explore with the Minister the meaning of the word ''significant'' in the phrase 
''significant damage to the environment''.
 I am a little concerned that it may be an unreasonably high test for the Environment Agency to meet before enforcement action is taken. I accept that deleting the word might make it a low test that could lead to unjustified enforcement action. I could not think of anything between significant and an absence of significance, but that was the aim of the amendment. I do not want a situation to arise in which damage of a worrying nature is caused that does not trigger enforcement action.

Elliot Morley: Yes, I think that I can help the hon. Gentleman. We need to have a phrase such as ''significant environmental damage''. We have been discussing the worries of current licence holders, and I have tried to assure them that the agency's attitude to the tests will be reasonable and that people's legitimate interests will be taken into account. That is important because our debate will be listened to by people outside the Committee.
 We do not want a power that triggers the removal of licences for small issues. The issue has to be significant. Significant damage relates to a wide range of environmental harms, including illegal activity and activities that are unlicensed or go beyond the terms of the licence. It is a test of the character of harm. 
 We have asked English Nature and the Environment Agency to consult and to issue guidance on how those tests will be applied. I am sure that the hon. Gentleman will be interested in that.

Norman Baker: I am grateful for that useful reply. I hope that I can be copied into that consultation process. Trusting that the Minister will note that, I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Norman Baker: I beg to move amendment No. 207, in
clause 32, page 37, line 30, leave out '£20,000' and insert '£50,000'.
 It is a serious matter if significant or even serious damage has been caused because people have failed to adhere to enforcement notices. It could sometimes lead 
 to long-standing or even permanent environmental damage. Under those circumstances, it is appropriate that people who know the rules but have not complied should face serious penalties—especially water companies or big firms. To some of them, although not all, £20,000 would be a drop in the ocean. I am sure that the circumstances of small independent abstractors could be taken into account, but £20,000 is not a large sum to the big companies. Indeed, a higher sum would be more appropriate.

Elliot Morley: I have some sympathy with the amendment. Again, I reassure the hon. Gentleman that £20,000 is consistent with the increased fines for abstraction and impounding offences under clause 63 and those for the control of pollution under the Environmental Protection Act 1990. The penalty is in line with the other penalties that can be imposed. However, for more serious breaches, there is no limit on the fine.

Norman Baker: I will come back to the Minister privately on that. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 32 ordered to stand part of the Bill. 
 Clauses 34 to 36 ordered to stand part of the Bill.

Bill Wiggin: I would like to see new clause 1 stand part of the Bill, although I know there is not much time left. It would be a tremendous addition.
 This is an important part of the Bill. It would be greatly improved by the new clause, because it seeks to protect the quarrying industry. The industry needs protection because of the Bill's drafting. However, bearing in mind the obvious environmental damage that could be caused—but which will not be caused because the industry is responsible—

Bill O'Brien: Order. It is now 5 o'clock, and according to the Order of 16 September, the Committee must adjourn.
 Motion made, and Question proposed, That further consideration be now adjourned.—[Mr. Ainger.]

Andrew Lansley: On a point of order, Mr. O'Brien. As my hon. Friend has moved new clause 1, is it not required by the order of proceedings that we decide on new clause 1 before we next meet?

Bill O'Brien: The procedural motion before the Committee that business should terminate at 5 pm was agreed.

Andrew Lansley: Further to that point of order, Mr. O'Brien. We are required to dispose of proceedings at 5 pm. The proceedings are that new clause 1 has been moved; it seems that it cannot be disposed of without being withdrawn or voted on. As I understand them, Standing Orders say that it cannot be withdrawn once the knife comes down.

Bill O'Brien: I draw attention to the fact that I did not have the opportunity to propose the Question to the Committee. The proceedings therefore closed when we reached the appointed time. That procedure was agreed. I cannot change it. If the hon. Gentleman
 wants it to be changed, he will have to go back to the House.

Norman Baker: Further to that point of order, Mr. O'Brien. I am not an expert on Standing Orders, but in other Committees of which I have been a member, it has been the practice on reaching the guillotine that votes are taken on Government amendments and on whatever was under discussion at the time. I appreciate that we cannot sort it out now, but if that interpretation is correct I wonder whether it would be in order to bring new clause 1 back at the next sitting.

Bill O'Brien: If I had had the opportunity to propose the Question from the Chair, we could have voted on it. However, by virtue of the agreement that was reached on 16 September, there was no time for me to propose it. The business therefore closes in accordance with the agreed Order.

Andrew Lansley: Further to that point of order, Mr. O'Brien. In the quick exchange that we had, my understanding is that my hon. Friend the Member for Leominster moved new clause 1 formally, you put the question, and my hon. Friend chose to speak again.

Bill O'Brien: I wanted to do that, but the Clerk drew my attention to the fact that the new clause had to be read the first time, and that I had to read the proposal that it be read a Second time. I did not have the chance to do that because of the time.

Norman Baker: Further to that point of order, Mr. O'Brien. With respect, you must have done, because the hon. Gentleman started speaking to it.

Bill O'Brien: I invited the hon. Member for Leominster to speak, but I did not have the opportunity to propose the Question that the new clause be read a Second time. I can do that only after the motion has been moved. On this occasion, it was not moved. The knife came down, and I had to draw attention to the agreement that was reached on 16 September. If hon. Members wish to challenge that, it can be taken up with the Speaker.
 In view of the resolution before the Committee, my duty now is to put the Question that business stand adjourned till 4.30 pm on 14 October. 
 Question put:—
The Committee divided: Ayes 11, Noes 6.

Question accordingly agreed to. 
 Adjourned at six minutes past Five o'clock till Tuesday 14 October at half-past Four o'clock.